Should I buy a car now or wait?

Buying a car continues to be a challenge amid record inflation, a shortage of support and rising interest rates. Since the start of the Covid-19 pandemic, prices for new and used cars have risen dramatically, leaving buyers with limited choice when it comes to finding affordable vehicles.

According Kelley’s Blue Book, the average price of a new car hit an all-time high of $48,301 in August, up nearly 11% from a year ago. And with another Federal Reserve interest rate hike set to hit soon, a new car is quickly becoming a luxury few Americans can afford.

That said, there are still signs of hope for those looking to buy an affordable vehicle this year. Below, Select takes a closer look at how consumers can find the best deals without spending more than their budget allows.

Subscribe to the Select newsletter!

Our top picks delivered to your inbox. Shopping recommendations that help you improve your life, delivered weekly. register here.

How to strategically buy a car in 2022

Of course, the real question is: should you buy a car now or wait until 2023?

Zach Shefska, co-founder and CEO of YAAa car buyer advocacy website, says you should wait to buy a car because prices will stay high due to low inventory.

According a recent report from Cox Automotive, the number of new and unsold vehicles available remained stable at 1.09 million. While this is technically a small improvement on the 1.07 million vehicles available last year, the numbers are still a far cry from where they were before the pandemic, when there were easily 2.55 million vehicles available in July 2020 or 3.69 million vehicles available in July 2019. .

Unfortunately, Shefska says it’s going to be a long time before manufacturers can recoup that number, but there are a few ways to give yourself a little edge when buying your next vehicle if you just can’t wait any longer.

Track car prices aggressively before you buy

First, Shefska recommends doing thorough research on the car you like and looking for other similar vehicles recently sold in your area. The more research you do, the more confident you will feel when you walk into a dealership. You can find free tools to do this on websites such as YAA, CarGurus and Cars.com.

If a dealer pushes back the desired price, mention the research you’ve done on other local, comparable deals. If they keep rushing you and giving you no wiggle room, consider taking the same search to another dealer and trying again there.

Buyers have leverage for some used vehicles

Shefska also says used car prices have fallen since the start of the summer and could continue to fall. This is because wholesale prices have come down, clearing the way for dealers to lower their prices as well. That said, there was a small spike in mid-summer, which brought the average used car price to just over $28,000 in July 2022.

Kelley’s Blue Book says real savings can be made when buying larger vehicles such as SUVs and pickup trucks, as consumers have shifted away from less efficient vehicles amid recent spikes in gas prices . Savings on small compact cars, meanwhile, can be harder to come by.

According to Shefska, if you’re looking for a used vehicle, consumers are in the driver’s seat. He strongly recommends buyers track down vehicles that have been sitting in the lot for more than 60 days – the longer the car sits there, the more incentive the dealership has to sell it.

Show up at the dealership with financing or cash in hand

It is well known that car dealerships make big profits by linking their cars to loans on their premises. Walking into a dealership with financing from your local bank or credit union — or cash on hand — will give you much more leverage to negotiate the car’s price down.

To find an auto loan in your area, you should first check to see if your own bank or credit union offers them. It’s also best to shop around online to find a lender with the best available interest rate and repayment terms that work for you.

If you have good to excellent credit, consider working with one of the following lenders for your car loan, as they all offer a reasonable APR or annual percentage rate:

Select has detailed the pros and cons of using a personal loan over an auto loan when buying a car. You can check out Select’s personal loan marketplace to compare loans and find the one with the best rates and terms for you.

Before applying for a new car loan, check your credit score to see if you might qualify for a low-interest loan. You can also check and monitor your credit score with one of the following credit monitoring services:

Chase Credit Journey

  • Cost

  • Credit bureaus monitored

  • Credit score model used

  • Dark web analysis

  • Identity theft insurance

Capital One CreditWise®

Information on CreditWise was collected independently by Select and was not reviewed or provided by Capital One prior to publication.

  • Cost

  • Credit bureaus monitored

  • Credit score model used

  • Dark web analysis

  • Identity insurance

American Express® MyCredit Guide

  • Cost

  • Credit bureaus monitored

  • Credit score model used

  • Dark web analysis

  • Identity theft insurance

Advantages

  • Score Goals lets you set a desired credit score and get personalized recommendations on the best ways to improve it
  • Has a credit score simulator

The inconvenients

  • Monitors only one credit bureau report
  • No dark web analysis
  • Does not offer identity theft insurance

Finally, if you plan to buy a car with cash, it might be a good idea to put your money in a high-yield savings account, which offers an above-average APY, so you can put your money to work for a bit. faster. Select ranked these accounts among the best:

LendingClub High Yield Savings

LendingClub Bank, NA, Member FDIC

  • Annual Percentage Yield (APY)

  • The minimum balance

    No minimum balance required after $100.00 to open the account

  • Monthly fee

  • Maximum transactions

  • Excessive transaction fees

  • Overdraft fees

  • Offer a current account?

  • Offer an ATM card?

Marcus by Goldman Sachs High Yield Online Savings

Goldman Sachs Bank USA is a member of the FDIC.

  • Annual Percentage Yield (APY)

  • The minimum balance

    None to open; $1 to earn interest

  • Monthly fee

  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle *Cycle withdrawal limit of 6/instructions is waived during the Coronavirus outbreak under Regulation D

  • Excessive transaction fees

  • Overdraft fees

  • Offer a current account?

  • Offer an ATM card?

At the end of the line

As long as the car market continues its slow recovery, prices will still be strongly inflated. As a result, Shefska says if you don’t absolutely need to buy a car right now, it’s probably best to wait.

In the meantime, consider using public transport more or getting around via ride-sharing services if your budget allows. If you have to buy a vehicle this year, check your credit score and bank account first to see what you can afford without neglecting any other financial responsibilities.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff alone and have not been reviewed, endorsed or otherwise endorsed by any third party.

About Janet Young

Check Also

How does home insurance and escrow work?

Our goal is to give you the tools and confidence you need to improve your …